Pramuka Bank Case Study

820 Words4 Pages
1. Introduction Pramuka savings and development bank was established operations in Sri Lanka in 21st July 1997. Mr. Rohan Perera, Seylan Bank 's founder Chief Executive Officer/General Manager has resigned from Seylan bank and with collaboration with some Seylan bank directors formed the Pramuka bank. Mr. Rohan Perera applied for license to operate a commercial bank from Central Bank of Sri Lanka in late 1996. But after 6 years the bank was collapsed and led economic system in a crucial situation. 7. Political Involvement to the Banking Industry Politics lay behind the establishment of PSD in 1997, when the governor of the central bank was overruled by the President and forced to license Pramuka Bank’s operations (The Sunday Leader, 2002). The central bank’s governor unfortunately appeared to stand alone in his reservations regarding the integrity and ethics of the Pramuka Bank chairman, as even the attorney general at the time failed to act on a file which held startling revelations of a one million US dollar fraud perpetrated by the Pramuka Bank owner during his tenure as chief financial officer and general manager of Seylan in 1992. In this infamous fraud,…show more content…
When compared to other banks, Pramuka bank was a very small bank, which had become insolvent on account of alleged fraudulent practices. It was the first banking failure in the Sri Lankan banking industry. But the impact to the economy due to bankrupt was enormous. In general, the credit evaluation and risk management practices of most domestic banks are weak. But some of the financial institutions have adopted risk-adjusted pricing and capital allocation models, while internal ratings play a greater role in pricing and provisioning among some of the more progressive licensed Commercial banks. Central bank should attach these types of good initiatives to legal framework to strength the banking
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